Belden Inc. Q2 FY2025 earnings call

• Key accomplishments: Second quarter revenue was $672 million, up 11% YOY; EPS grew 25% to $1.89; orders up 8% sequentially and 16% YOY; book-to-bill ratio 1.05; gross margins 38.9% (up 70bps YOY); adjusted EBITDA margins 17% (up 50bps YOY); trailing 12-month free cash flow $216 million; repurchased 1 million shares for $100 million.
• Wins: Secured a multi-site solutions award with a leading hyperscale data center customer, and a global specification by a major U.S. automotive manufacturer for advanced connectivity products.
• Solutions transformation: Highlighted IT/OT convergence, innovative use of products in new applications, and collaborative approach across ecosystems to deliver tailored solutions.

Automation Solutions: Revenue grew 10% year-over-year, EBITDA margins improved to 21.4%, orders up 11% year-over-year, book-to-bill of 1.0, total organic growth of 8% with positive growth in all regions. Smart Infrastructure Solutions: Revenue grew 13% year-over-year, EBITDA margins improved to 11.8%, strong order growth resulting in a book-to-bill of 1.1, robust demand in targeted growth verticals. Broadband: Revenue up year-over-year, including 5% organic growth in fiber products.

• Third quarter revenue expected between $670 million and $685 million, representing 2% to 5% increase over prior year quarter.
• Adjusted EPS expected between $1.85 and $1.95, representing 9% to 15% increase over prior year quarter.
• Third quarter tax rate projected at 12.5%, full-year tax rate slightly over 15%.

• Policy uncertainty impacting customer investment decisions.
• Delays in DOCSIS upgrades due to interoperability and technology issues.
• Volatility in copper prices and challenges with tariff pass-through.

Q: Could you help us understand the second half demand environment, including risks and upside?

A: Automation Solutions seeing steady improvement with growth in geographies and key verticals; Smart Infrastructure Solutions has some uncertainty with white space competition and DOCSIS rollout delays; Broadband has strength but some noise from DOCSIS upgrades.

Q: On margin performance and leverage moving forward, any changes?

A: No dramatic changes, continue to model roughly 25% incremental EBITDA margin on a full-year basis.

Q: On Smart Infrastructure Solutions margin and solutions tracking?

A: Majority cost increase due to solutions initiatives, margin slightly dilutive from copper and tariff pass-throughs, but expected to improve with organic growth.

Q: On M&A pipeline for solutions approach?

A: Focus on closing technology gaps, acquiring access to end customers, and enhancing software capabilities.

Q: On fiber and broadband, and copper impact?

A: Fiber sales strong in DOCSIS upgrades and fiber-to-the-home; copper volatility already incorporated into guidance, pass-through takes roughly 2 months.

Q: On outlook and order book context?

A: Guidance balanced, recognizing policy uncertainties but third quarter expected to mirror seasonal patterns with potential for new revenue and EPS records.